MADISON, Wis.–A new study from the Filene Research Institute probes ways credit unions can provide young entrepreneurs with assistance in achieving their goals.
“For years credit unions have pursued the goal of ‘getting younger’—and for good reason,” said Filene in announcing the new research, titled “Are Credit Unions Doing Enough to Help Young Entrepreneurs.”
According to the study, authored by Filene’s James Marshall and Manpreet Nat, “With the average credit union member’s age hovering in the late 40s, Gen Y (18–35-year-olds) represents a prime opportunity for credit unions to continue the legacy of cooperative finance among newer generations. However, focused initiatives are seldom consistently deployed to execute these aspirations. It’s easy to stake a claim, but what are you doing to further that?”
The authors note that as “debt skyrockets to record levels and young adults struggle with un- and underemployment, entrepreneurship is becoming a viable option for many. Starting a business is gratifying and self-fulfilling, but it’s also filled with capital challenges and strategic roadblocks. By supporting young adults in their endeavors to become small (or large) business owners where others may not, credit unions can foster loyalty among these members.”
The study cautions, however, that lending to young entrepreneurs “isn’t always feasible or realistic,” noting that many 18–35-year-olds lack the necessary credit history to obtain capital, and their ventures may not include tangible assets or collateral.
“As a result, many credit unions are unwilling and unable to take on the risk of providing financial support,” the authors state.
With that in mind, the research has identified several initiatives credit unions can implement to support young entrepreneurs when lending isn’t a viable option. Among those initiatives:
- Financial education
- Seed funding competitions
- Offering work space
- DIY tools and applications
- Scholarships/grants
- Microlending
- One-on-one mentoring/counseling
“By implementing these solutions, credit unions can provide young entrepreneurs with the education they need while helping to develop traits such as financial risk tolerance and entrepreneurial intent,” the authors suggest.
For info: www.filene.org.